‘In compliance with Indian laws,’ says Flipkart after ED notice on $1.35 bn fine

Walmart-owned Flipkart said on Thursday that it is in compliance with Indian laws, including FDI regulations. It stated that it would cooperate with the Enforcement Directorate with regards to the notice sent by the agency. The ED sent a show-cause notice to Flipkart, its founders Binny Bansal and Sachin Bansal, as well as investor Tiger Global to explain why they should not be fined $1.35 billion for lapses.

Flipkart told news agency PTI that it is in compliance with the rules. "We will cooperate with the authorities as they look at this issue pertaining to the period 2009-2015 as per their notice," Flipkart added. The founders who have both exited the company are yet to comment on the development.

ED issued notices under various sections of the Foreign Exchange Management Act (FEMA) to 10 recipients last month, including Flipkart, and both the Bansals.

The company has been under the ED’s scanner since 2012 for alleged FDI rules violation. As per official sources, the agency has found alleged violations of FEMA under various counts including an instance of transfer and issue of security to a person/entity outside India.

Walmart Inc had picked 77 per cent stake in Flipkart for USD 16 billion in 2018. Its founders and many of its investors had taken a partial or complete exit at that time.

Last month, Flipkart Group had announced raising $3.6 billion (about Rs 26,805.6 crore) in funding led by GIC, Canada Pension Plan Investment Board (CPP Investments), SoftBank Vision Fund 2 and Walmart, valuing the e-commerce giant at $37.6 billion.

Also read: ED warns Flipkart, founders of $1.35 bn fine over violation of foreign investment laws